Player identification in gambling - methods, features and purpose

Each jurisdiction with a legal gambling business has its own rules regarding the identification of a player who wants to spend money on gambling in an online casino or land-based establishment. Foremost, this is necessary to prevent minors from playing, but at the same time, identification is now also inextricably linked to the fight against money laundering (AML), so gamblers often need to provide proof of the source of their finances. You can find more information by reading online casino reviews or read our article.

Global experience

In most jurisdictions, player verification is an integral part of KYC (Know Your Customer) requirements. These requirements exist in a strong symbiosis with AML (Anti-money laundering) procedures. Firstly, this is noticeable in the fact that along with identifying documents, the player must provide documentary evidence of the funds that will be spent on the game. And this applies equally to both land-based and online segments, but mostly such documents are requested in the case of large transactions or amounts of funds that want to be exchanged for chips. 

In the world jurisdictions, there is no single standardized list of documents that a player needs to pass verification. But regulators often provide lists of methods and documents required to identify the player's identity and funds. For example, in the USA, it is a full legal name, address, and social security number. The procedure in the country is divided into two stages - standard identity verification and standard address verification.

In the first case, the supporting document can be a passport, driver's license, voter's ID, national identity card, student ID or employee card. At the second stage, the player proves the truthfulness of residence at the specified address thanks to a utility bill, bank statement, house insurance certificate.

What inconveniences does it create for operators

The first thing that a gambling business owner may face is that manual verification of identification and KYC is quite long, expensive and inconvenient. Without unified standards or systems, players can also suffer because each gambling establishment may require different documents that players must provide again and again. This creates privacy risks, as customers transfer a large amount of personal data to many gambling companies, which can potentially lead to leakage of this information. The factor that a person gets tired of constantly passing verification and eventually refuses the services of a legal operator in favor of an offshore one also plays its role. Let's not forget that during the pandemic, the demand for the online sector has increased significantly, and high-demand means that businesses need to conduct more KYC checks. This leads to a queue of verification requests that can take weeks for online casino support to get to.

In addition, compliance with KYC requirements requires higher costs in this area. Currently, most online gambling representatives are classified as non-banking financial institutions, which have strict compliance requirements. For operators, this means the need to hire expensive risk management and compliance officers to ensure compliance with both KYC and AML requirements, which are aimed specifically at the financial flows of a virtual online casino.

A good deal of gambling business reports show that over the past five years, 68% of online operators have been forced to increase their budgets for KYC and AML, and in general, the costs of these items have increased by 74%. In 2020, 65% of online casinos reported that they are going to increase their compliance budgets by 13%.

The constant transfer of sensitive data to third-party verifier makes this information vulnerable prey for fraudsters. Such a large amount of data that passes through several hands has a chance to be stolen. And the verifier themselves are also people who cannot always notice a fake document.

Another drawback is the geography of online casinos, whose customers can be from different countries. And if the operator or its verifier have tools to identify players in the USA and the UK, they will not have the necessary tools for other countries.

And the last aspect is different regulatory requirements. The lack of unified standards can confuse online casino owners about their compliance. For example, when should KYC checks be done - if a player deposits more than €2 thousand, as required by the EU, should KYC be applied at the time of account opening and registration, as it is established by UK laws? Given the large fines for violation of KYC principles, it is straightforward for online casino operators to get confused in different provisions of the legislation.